: combien sommes nous a avoir investi
sur open energy? Je l'ai fait mais un peu trop tot. J'attends l'explosion de dyna pour renforcer open, prendre des bcon et faire quelques autres emplettes
- 23 octobre 2007•21:10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Some of the statements in this Quarterly Report on Form 10-QSB, including, but not limited to this Management's Discussion and Analysis or Plan of Operation, contain forward-looking statements regarding the Company's business, financial condition, and results of operations and prospects that are based on the Company's current expectations, estimates and projections. In addition, other written or oral statements which constitute forward-looking statements may be made by the Company or on the Company's behalf. Words such as "expects," "anticipates," "intends," "believes," "estimates," "may," "would," or variations of such words and similar expressions are intended to identify such forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements are not guarantees of future performance, and are inherently subject to risks and uncertainties that are difficult to predict. As a result, actual outcomes and results may differ materially from the outcomes and results discussed in or anticipated by the forward-looking statements. All such statements are therefore qualified in their entirety by reference to the factors specifically addressed in the sections entitled "Risk Factors" in the Company's Annual Report on Form 10-KSB and this Quarterly Report on Form 10-QSB. New risks can arise and it is not possible for management to predict all such risks, nor can management assess the impact of all such risks to the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-QSB. The Company undertakes no obligation to revise or update publicly any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-QSB, other than as required by law.
Open Energy Corporation is a renewable energy company focused on the development and commercialization of a portfolio of solar products and technologies capable of delivering competitive power and water for a wide range of residential, commercial and industrial applications. Our mission is to harness the power of the sun to meet the growing resource demands of sustainable 21st century development.
Our company was originally incorporated in the State of Nevada on April 11, 2002 under the name Barnabus Enterprises Ltd., and in May 2005 we changed our name to Barnabus Energy, Inc. By 2005, we had acquired gas leases and a number of existing and proposed gas wells in Alberta, Canada. This network tied into a transport pipeline leading into the United States, where a premium for production could be obtained.
In June of 2005, we made a strategic business decision to shift our focus. Motivated by the growth in wind, solar and other renewable energy technologies and believing that market forces and legislative incentives were in place to support the domestic solar industry, we decided to transform the Company into a renewable energy company.
In August of 2005, we signed an exclusive international license for SunCone CSP (concentrating solar power) technology. SunCone CSP utilizes curved geometries and reflective surfaces to collect solar thermal energy, which can then be used to heat a working fluid. Potentially, this energy can drive a turbine to produce electricity, or purify water using multi-stage flash distillation or membrane filtration devices. The first prototype was designed and built by Hytec Engineering of Los Alamos, New Mexico, and initial testing of this prototype system was successful.
That same month, we signed an agreement to acquire a controlling interest in Toronto-based Solar Roofing Systems, Inc. (SRS), which has a patent pending on SolarSave photovoltaic (PV) roofing membrane. SRS founder Norman Dodd subsequently joined our Board of Directors. In November of 2005, we signed an agreement to acquire California-based Connect Renewable Energy, Inc. (CRE), which developed, patented, and is currently manufacturing PV integrated roofing tiles, and CRE founder Ron Gangemi joined the Board. Both companies produce light-weight, fire-rated, weather-resistant, building-integrated PV roofing materials. We also moved our corporate offices to Southern California, the most active solar marketplace in the U.S. On December 8, 2005, we sold our oil and gas holdings.
In March 2006, we completed the acquisition of CRE and in April 2006, we acquired the remaining interests in SRS. SRS and CRE provided our company with proprietary, next generation photovoltaic products, and expanded our manufacturing, marketing, sales and service capabilities. In February and March 2006, we signed agreements to obtain approximately $20 million through a series of financings, and on April 21, 2006 we changed our name to Open Energy Corporation in order to better reflect our mission, vision and strategic objectives.
In December 2006, we acquired WaterEye, a Grass Valley, California based company with proprietary, web-enabled water monitoring software. Its founder, Tom Wolf, became our Senior VP of Engineering and Development. WaterEye provides ongoing revenues, water treatment expertise, and a technology platform for monitoring our PV installations.
In March 2007, we signed a master distribution agreement with privately held Eagle Roofing Products, one of the largest manufacturers of cement tiles in North America. This strategic alliance provides our company with access to major home developers and roofing contractors across the country. We intend to sell our residential tile products through this distribution pipeline, and utilize the building trades as our installation and service providers.
In May of 2007, we signed a letter of intent with Suntech Power Holdings Co., Ltd. (NYSE: STP) to manufacture our tile and PV glass products in China. We believe this relationship has the potential to provide the production volume required to compete for a significant share of the U.S. residential and commercial solar electric marketplace.
We recently reformulated our overall corporate strategy based on three primary factors concerning our products and industry:
We have proprietary building-integrated PV products that can be sold,
1) installed and serviced through the building trades;
2) With the recent influx of capital and explosion in PV capacity, the solar industry is becoming increasingly commoditized, making it extremely difficult to compete as a manufacturer; and
3) Solar installations are increasingly being financed through power purchase agreements.
These business realities motivated our company to re-evaluate our corporate strategies and undertake several key initiatives:
1) Utilize the traditional building trades as solar installers. In March of 2007, we signed a joint marketing and distribution agreement with Eagle Roofing Company, the largest concrete tile manufacturer in North America. A similar initiative is now underway for the membrane product.
2) Outsource high volume product manufacturing in order to remain competitive. In May of 2007, Open Energy and Suntech Power Holdings Co., Ltd. (NYSE:STP), signed a letter of intent for broad initiatives targeting the expansion of BIPV product sales in North America. Suntech will supply their high-efficiency polycrystalline cells and provide cost effective, high quality production of the SolarSave PV Tile product. The companies will market each other's portfolio of products in the U.S. Under the terms of the LOI, Suntech will be granted the right to acquire up to 5% of the outstanding shares of Open Energy. This relationship, as well as others under discussion, will give Open Energy the ability to deliver high quality products in very large volumes to meet the demands of the building and construction channels.
3) Offer financed solutions through long-term power purchase agreements. In general, homeowners, commercial tenants and industrial operations do not buy power generating systems. They pay for power through their monthly utility bills. Until recently, solar electric systems were very expensive, although state rebates, federal tax incentives and other government programs, have reduced the costs of solar electricity. Open Energy has developed a unique financial solution to the dilemma. Together with a tax equity partner, we will install our products in "solar communities." We will coordinate the engineering, equipment procurement and construction of each project. We will contract with third parties to maintain the rooftop systems, to read the meters, and to bill the customers. The equity investor will receive a secure internal rate of return and the benefits of the 30% Federal tax credit and 5-year accelerated depreciation under the 2005 U.S. Energy Bill. The builders will reduce their construction costs and, hopefully, sell their homes more quickly. The homeowner will be guaranteed a reduced monthly utility bill and receive the benefits of incremental home value at no additional expense or tax impact. Open Energy will sell more products and participate in the long term revenue streams.
The foregoing three initiatives (utilization of the building trades, outsourcing manufacturing, and providing financed solutions) will allow Open Energy to concentrate on its core competencies as a leading edge designer of innovative products and technologies, and as a customer-centric marketer of renewable energy solutions. Our value will be in owning the customer. We will remain technology agnostic. As thin film, nano-materials, vapor deposition and other innovations become commercially viable on a cost per installed watt basis, we will utilize them to develop commercial products and bring them to market. Unlike many of our competitors, we are not wed to a particular product or distribution channel. We do not spend extensively on research, or carry expensive operational overhead. We are virtually not vertically integrated. This is how we intend to be successful in the rapidly changing business environment of renewable energy.
Open Energy will concentrate on its core competencies as a leading edge designer of innovative products but will outsource the majority of its high volume manufacturing in order to remain competitive. We are currently evaluating alternatives to determine how to optimize capabilities at our Aurora, Ontario, Canada and Grass Valley, California locations.
Overview for the Three Months Ended August 31, 2007
During the quarter, the Company continued to suffer from a lack of capital to purchase inventory, thus our ability to manufacture product was severely constrained. In addition, we did not have sufficient capital resources to implement our revised corporate strategy as discussed above, nor did we have the capital to make the investments needed to complete our transition of PV cell vendors for both the tile and membrane products. Also during the quarter, we temporarily suspended shipments of our SolarSave photovoltaic (PV) roofing membrane, which further constrained our revenues. We did however, deliver the PV glass tiles for the California Academy of Science Museum in San Francisco, California which accounted for a majority of our revenues in the quarter.
On September 19, 2007, we entered into a Securities Purchase Agreement with a certain accredited investor for the private placement of (i) a convertible note in the principal amount of $20,000,000 and (ii) a warrant to acquire up to 40,000,000 shares of common stock, with net proceeds totaling $18.46 million. Thus, we now believe we have the capital resources to implement our revised corporate strategy over the next nine to twelve months.
Limited Operating History
There is limited historical financial information about the Company upon which to base an evaluation of its future performance. The Company has generated limited revenues from operations and cannot guarantee that the Company will be successful. The Company is subject to risks inherent in a fast growing company, including limited capital resources, possible delays in product development and manufacturing, and possible cost overruns due to price and cost increases. No assurance can be given that future financing will be available to the Company on acceptable terms. Additional equity financing would result in dilution to existing shareholders.
Results of Operations - Three Months Ended August 31, 2007
The following table sets forth the Company's consolidated statement of operations data for the three month period ended August 31, 2007.
Summary Statement of Operations (in thousands):
Three Months Ended August 31,
Revenues, net $ 1,547 $ 356
Gross margin (264 ) 46
Selling, general and administrative 3,931 4,077
Research and development 72 319
Total operating expenses 4,003 4,396
Loss from operations (4,267 ) (4,350 )
Total other (expense) (5,531 ) (882 )
Loss before income tax benefit (9,798 ) (5,232 )
Income tax benefit 809 300
Net loss $ (8,989 ) $ (4,932 )
Net loss per share - basic and fully diluted $ (0.08 ) $ (0.07 )
Revenues for the three months ended August 31, 2007 were $1,547,000, consisting primarily of SolarSave PV Glass shipped to the California Academy of Sciences Museum in Golden Gate Park, San Francisco, California, and shipments of SolarSave Tiles for residential projects. We have shipped all pieces associated with the California Academy of Sciences Museum and have recognized all revenue except for the amounts that will be paid upon final customer acceptance. We had limited revenues for the quarter from the SolarSave Membrane product since we halted shipments while we worked on resolving our product quality issue.
Cost of sales and gross margin
For the quarter ended August 31, 2007, cost of sales was $1,811,000, resulting in a negative gross margin of $264,000. The negative gross margin reflects the underutilization of manufacturing capacity at the Grass Valley and Aurora facilities (and the resulting under absorption of labor and overhead expenses due to low sales volume), and higher than expected freight and manufacturing costs incurred as a result of the tight delivery schedule for the California Academy of Sciences Museum installation.
In May of 2007, Open Energy and Suntech Power Holdings Co., Ltd. (NYSE:STP), signed a letter of intent for broad initiatives targeting the expansion of BIPV product sales in North America. It is anticipated that Suntech will supply their polycrystalline cells and provide cost effective production of the SolarSave PV Tile products. In addition, we are currently evaluating alternatives to determine how to optimize capabilities at our Aurora, Ontario, Canada and Grass Valley, California locations. Open Energy will concentrate on its core competencies as a leading edge designer of innovative products but will outsource the majority of its high volume manufacturing in order to remain competitive. No decision or dates have yet been established to discontinue operations at any location. Due to these manufacturing initiatives, we expect our gross margin to begin to improve.
Selling, general and administrative
Selling, general and administrative expenses for the quarter ended August 31, 2007 were $3,931,000 and included $2,111,000 in stock-based compensation, $43,000 of depreciation expense, $173,000 of intangible asset amortization expense, and $306,000 of legal and professional fees associated primarily with SEC reporting and efforts to protect the Company's intellectual property. Net of non-cash charges, selling general and administrative expenses were $1,605,000 for the quarter.
Research and development
For the quarter ended August 31, 2007, research and development expenses were $72,000 and were related to the ongoing development of the SolarSave Tiles and SolarSave Membranes, and future product development.
Future research and development efforts will be focused on improvements to our SolarSave solar roofing tiles, roofing membranes, and architectural glass which we believe will contribute to increasing and retaining market share.
In addition, further work will be required for SunCone CSP to design a commercially viable system capable of interfacing with an off-the-shelf steam turbine to produce electricity and/or to interface with either flash distillation or membrane filtration equipment in order to produce potable water from salty or brackish sources, in a cost effective manner.
Other income (expense)
During the quarter ended August 31, 2007, other expenses were $5,531,000, of which $5,130,000 was non-cash interest from the amortization of the discounts recorded in connection with warrants, beneficial conversion features and original issue discounts associated with convertible debentures and notes payable.
For the quarter ended August 31, 2007, the Company incurred a net loss of $8,989,000, of which $2,111,000 was stock-based compensation, $245,000 was depreciation and amortization expense, and $5,130,000 was non-cash interest from amortization of discounts related to of the warrants, beneficial conversion feature and original issue discount associated with convertible debentures and convertible notes.
The continuing quarterly net operating loss is directly related to lower than anticipated sales volume and under-utilization of manufacturing facilities. We recently reformulated our overall corporate sales, marketing, and manufacturing strategies to address these issues. Also during the quarter, we had limited revenues from the SolarSave Membrane product since we halted shipments while we worked on resolving our product quality issue.
Liquidity and Capital Resources
The Company has financed operations since inception primarily through private sales of securities. As of August 31, 2007, the Company had $901,000 in cash, inventory of $1,348,000 and negative working capital of $9,860,000. On August 31, 2007, we closed a securities purchase agreement with an accredited investor for the private placement of a convertible promissory note in the principal amount of $1,000,000 (the "8/31/07 Note") and a related warrant (See "Debt Financings" below). After August 31, 2007, we closed a Securities Purchase Agreement with another accredited investor for the private placement of a convertible note in the principal amount of $20 million that included the issuance of a warrant to purchase up to 40 million shares of common stock with an exercise price of $.50 per share. The net proceeds from this financing were $18.46 million, and are not reflected in the financial statements as of August 31, 2007. Due to these additional financings, we believe we now have the capital resources needed to carry out our revised corporate strategy over the next nine to twelve months. Other than cash and cash equivalents and the proceeds from the subsequent financing, the Company has no unused sources of liquidity.
The cost of photovoltaic cells (the primary component of cost of sales for solar roofing products) is volatile. The Company is uncertain of the extent to which this will affect its working capital in the near future. The fluidity of the current cell supply from the Company's current major cell suppliers could cause a disruption or a complete stoppage of the Company's manufacturing operations for the glass and membrane products, creating a further liquidity drain.
The Company has incurred significant losses from operations since its inception, and is unsure if or when it will become profitable. To date, the Company has experienced significant negative cash flows from operations. Based on its current cash usage rates, an expected increase in operational expenses and non-operational contractual obligations, as well as an obligation to pay federal and state income withholding and employment taxes associated with restricted shares granted to several employees, the Company estimates that it currently has adequate cash to fund operations for the next nine to twelve months.
Significant Capital Expenditures
The Company does not currently intend to make significant capital expenditures over the next 12 months.
See "Management Discussion and Analysis - Subsequent Events" for a discussion of convertible note financings after August 31, 2007.
On August 31, 2007, Open Energy Corporation closed a securities purchase agreement with an accredited investor for the private placement of a convertible promissory note in the principal amount of $1,000,000 (the "8/31/07 Note") and a related warrant to acquire up to 1,200,000 shares of common stock (the" 8/31/07 Warrant") for a purchase price of $950,000. The 8/31/07 Note matures six months after August 31, 2007 but the Company has the right to prepay it in whole or in part without penalty prior to the maturity date. Commencing on the maturity date, the 8/31/07 Note accrues interest at the rate of 10% per annum. The principal and accrued interest is convertible into common stock of the Company at $0.50 per share. However, the Investor may not convert if the conversion shares issued would result in the Investor beneficially owning greater than 4.99% of Open Energy's outstanding common stock.
In the event of default, the 8/31/07 Note will accrue interest at a rate of 10% per annum and the Investors may convert any or all of the outstanding principal and interest into common stock at a fixed conversion price equal to $0.1868 per share. In no event shall the conversion price be lower than $0.05.
The 8/31/07 Warrant is exercisable through August 31, 2012. The exercise price is $0.709, subject to adjustments and anti dilution provisions which include a price floor of $0.05 per share.
On June 15, 2007, the Company entered into a Note and Warrant Purchase Agreement with an accredited investor for the private placement of a $950,000 promissory note (the "6/15/07 Note") and a related warrant to acquire up to 4,000,000 shares of common stock (the "6/15/07 Warrant) for a purchase price of $750,000. In connection with this transaction, the Company's Chief Executive Officer entered into a Stock Pledge Agreement pursuant to which certain of his shares of the Company's common stock were pledged to secure the performance of the 6/15/07 Note, and he agreed to guaranty any deficiency above and beyond the value of the shares. Had there been an event of a default with respect to the 6/15/07 Note, the investor had the option to either (i) foreclose on the common
stock pledged or (ii) convert all unpaid amounts due under the 6/15/07 Note into (A) a debenture which is convertible into shares of common stock of Open Energy and (B) a warrant exercisable for shares of common stock.
The maturity date of the 6/15/07 Note was October 15, 2007, and it was paid in full on October 5, 2007. The Note was purchased at a discount, thus the effective interest paid was $200,000. The 6/15/07 Warrant is exercisable for three years, and is subject to anti dilution provisions and a floor exercise price of $0.05 per share. In addition, a warrant to purchase 400,000 shares of common stock at the rate of $.50 per share that expires on June 15, 2012, was issued to an investment banker for services rendered in connection with the financing.
10% Secured Convertible Debentures and Related Warrants
On March 30, 2007, Open Energy Corporation entered into an agreement with Cornell Capital Partners, L.P. for the private placement of (i) a Convertible Secured Debenture in the original principal amount of $3,000,000 and (b) a Warrant to purchase up to 6,000,000 shares of our common stock, par value $0.001 per share, which were issued and sold for an aggregate purchase price of $3,000,000. We received gross proceeds of $3,000,000, before expenses, from the financing transaction, which were used for general corporate and working capital purposes. The Debenture accrues interest at a rate of 10% per annum and matures on March 30, 2008. No payments of interest or principal are due under the Debenture until maturity. Subject to limitations contained in the Debenture for the maximum amount that may be converted, the Debenture is convertible at any time at Cornell's option into shares of our common stock at a conversion rate which is calculated by dividing (i) the amount of the outstanding and unpaid principal and interest of the Debenture to be converted into shares of common stock by (ii) the conversion price of $0.50. The conversion price is subject to adjustment in the event we issue shares of common stock for a consideration per share less than the conversion price in effect immediately prior to such issuance or sale, except for issuances in connection with an approved stock plan, the conversion, exchange or exercise of an outstanding security, an acquisition, or conversion of the Debenture. The Warrant issued to Cornell has an initial exercise price of $0.50 per share, subject to adjustment, and a term of five years from the issuance date. The issuance of the March 30, 2007 debentures and warrants caused a reduction in the warrant exercise price for the previously issued Cornell warrants to $0.50 per share.
5% Secured Convertible Debentures and Related Warrants
In March 2006, the Company entered into a securities purchase agreement with Cornell Capital Partners, L.P. ("Cornell"), pursuant to which, as subsequently amended, the Company agreed to issue and sell to Cornell up to an aggregate of $15.0 million of secured convertible debentures ("5% Debentures) and warrants to purchase up to an aggregate of 13,250,000 shares of the Company's common stock. On March 31, 2006, Cornell purchased $10,000,000 of the 5% Debentures and the Company issued to Cornell warrants to purchase up to an aggregate of 7,000,000 shares of common stock. Cornell also agreed to purchase an additional $5,000,000 of 5% Debentures and warrants to purchase up to 3,000,000 shares of common stock on the date the Company's registration statement covering the shares issuable upon conversion of the 5% Debentures and exercise of the warrants was declared effective. Initially, the warrants were to have an exercise price of $1.50 per share and a term of five years. Each 5% Debenture matures three years from its date of issuance and bears interest at five percent (5%) per annum.
The conversion price of the 5% Debentures is the lower of (i) a fixed conversion price (initially $1.50) or (ii) 95% of the lowest volume weighted average price of the common stock during the 30 trading days immediately preceding the conversion date. The 5% Debentures are secured pursuant to the terms of (1) a pledge and escrow agreement among the Company, Cornell and David Gonzalez, Esq., as escrow agent, and (2) security agreements among the Company, Cornell and two of the Company's subsidiaries. In accordance with the pledge and escrow . . .
- 23 octobre 2007•21:17
mais la suit de près , j'attend moi l'explosion de wwat ....je n'ai pas l'impression qu'il y ai urgence a rentrer sur ce titre , la nouvelle stratégie des dirigeant doit d'abord faire ces preuves ...